- Company pension contributions for a director are usually limited by the £60,000 annual allowance (2025/26), not by your salary, and you can carry forward unused allowance from the previous three years. They are deductible against Corporatio...
In detail
There is an important difference between personal and company pension contributions for a director.
Personal contributions are limited to your relevant UK earnings, which broadly means your salary, not your dividends. So a director on a £12,570 salary can personally contribute relatively little with tax relief. Company contributions, made by the company directly into your pension, are not capped by your salary. They are limited instead by the £60,000 annual allowance (tapered for very high earners), and you can carry forward unused allowance from the previous three tax years.
Company contributions are deductible against Corporation Tax and carry no National Insurance, so for a director with retained profit they are often more efficient than taking the money as dividends. Our director pension guide works through the figures, and the corporation tax calculator shows the saving on profit.